Correlation Between PT Bank and Federal National

Can any of the company-specific risk be diversified away by investing in both PT Bank and Federal National at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining PT Bank and Federal National into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PT Bank Central and Federal National Mortgage, you can compare the effects of market volatilities on PT Bank and Federal National and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in PT Bank with a short position of Federal National. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and Federal National.

Diversification Opportunities for PT Bank and Federal National

-0.12

Correlation Coefficient

PT Bank  Federal National

Good diversification

The 3 months correlation between PBCRF and Federal is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Central and Federal National Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal National Mortgage and PT Bank is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on PT Bank Central are associated (or correlated) with Federal National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal National Mortgage has no effect on the direction of PT Bank i.e., PT Bank and Federal National go up and down completely randomly.

Pair Corralation between PT Bank and Federal National

Assuming the 90 days horizon PT Bank is expected to generate 2.73 times less return on investment than Federal National. In addition to that, PT Bank is 1.09 times more volatile than Federal National Mortgage. It trades about 0.03 of its total potential returns per unit of risk. Federal National Mortgage is currently generating about 0.08 per unit of volatility. If you would invest  1,200,000  in Federal National Mortgage on August 2, 2024 and sell it today you would earn a total of  399,500  from holding Federal National Mortgage or generate 33.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

PT Bank Central  vs.  Federal National Mortgage

PT Bank Central

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Bank Central has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, PT Bank is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Federal National Mortgage

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Federal National Mortgage are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting technical and fundamental indicators, Federal National displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PT Bank and Federal National

The main advantage of trading using opposite PT Bank and Federal National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bank position performs unexpectedly, Federal National can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Federal National will offset losses from the drop in Federal National's long position.

The idea behind PT Bank Central and Federal National Mortgage pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.